Excelsior share are currently selling for $25 each. You bought 200 shares one year ago at $24 and received dividend payments of $1.50 per share. What was your total rate of return?
A) 4.17%
B) 6.25%
C) 10.42%
D) 104.67%
E) 110.42%

Question

Quizplus · Accepted Answer

To calculate the total rate of return, use the following formula:

Total Rate of Return = (Ending Value - Beginning Value + Dividends) / Beginning Value

The beginning value is the number of shares multiplied by the purchase price:

200 shares x $24/share = $4,800

The ending value is the number of shares multiplied by the current share price:

200 shares x $25/share = $5,000

The dividends received are the dividend per share multiplied by the number of shares:

$1.50/share x 200 shares = $300

Now plug these values into the formula:

Total Rate of Return = ($5,000 - $4,800 + $300) / $4,800 = 10.42%

Therefore, the correct answer is C) 10.42%.

Excelsior Share Are Currently Selling for $25 Each